Increased social network can have big payoff for nonprofits, study shows

Even small groups can employ social media to ride the new wave of charitable giving

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“Donors on social media and crowdfunding sites do not seem to care how efficient the organization is or how large it is. Instead, they are swayed by what we called the ‘social network effect.’”

Gregory Saxton, associate professor of communication

University at buffalo

BUFFALO, N.Y. — Charitable fundraising once depended
primarily upon a charity’s size, efficiency and longstanding
reputation. That was before Razoo, Kickstarter, Facebook and
Twitter came to town.

In the first academic study to look at what determines
charitable giving on social-media sites, researchers found that
those media have created a more level playing field in the
nonprofit world, one in which successful use of technology can make
up for limited organizational size.

Technology and social media, it turns out, can not only raise
the online profile of even small organizations, but increase their
support bases and their ability to generate donations online and
off.

That is among the findings of “The Social Network Effect:
Determinants of Giving Through Social Media,” a study by
Gregory Saxton, associate professor in the University at Buffalo
Department of Communication, and Lili Wang, assistant professor of
nonprofit studies in the Arizona State University School of
Community Resources and Development.

It was published online in the current issue of Nonprofit and
Voluntary Sector Quarterly.

“This paper is innovative in several ways,” Saxton
says. “It is the first to look at the predictors of donations
in a social media setting. It also appears to be the first
study of donations on a crowdfunding platform. Furthermore, it
examines variables the ‘traditional’ studies have
ignored — the size of the organization’s social network
and the organization’s ‘Web capacity.’

“It is in analysis of these variables,” says Saxton,
“that the study contributes to the theoretical discussion
around the determinants of donations.

“The first, and major, unexpected finding,” he says,
“was that financial ratios, especially the level of a
charity’s organizational efficiency, were simply unimportant
in online giving, although they are known to be prominent
determinants of off-line charitable giving.

“Studies that use the economic model of giving have shown
that aggregate levels of charitable contributions are positively
related to organizational size,” says Saxton, “so our
second and more minor finding was unexpected as well.

“It was that the size of an organization (measured as
total financial assets) did not have a significant positive effect
on the number of donations received,” he says.

“This led us to surmise that donors on social media and
crowdfunding sites do not seem to care how efficient the
organization is or how large it is. Instead, they are swayed by
what we called the ‘social network effect,’” says
Saxton, “which is an effect provoked by the size of an
organization’s network of followers; that is, the number of
online ‘friends’ or fans it has.”

The study, which analyzed the fundraising activities of more
than 50 organizations using Facebook for that purpose, suggests
that if charities understand and cultivate this effect, they could
experience a payoff in the number of donations and supporters.

Among the study’s findings in that regard:

· Online
donations are driven by the number of ‘friends’ that a
cause elicits through online sites. Friends often recommend a cause
to other friends, which extends the reach the cause or group
has.

·
Donations are also influenced by the Web capacity attached to the
charity, which is measured by the number of users reached by the
organization’s website.

· A
nonprofit looking for success in social media fundraising should
increase the quality and reach of its website, the latter measured
by the size of its online constituencies, and encourage its
supporters to promote the cause online.

· To
accomplish this, the organization needs to have the appropriate
level of “tech savvy.” Having employees who
strategically deploy social media strategies can be just as
important to their success as having adequate financial
resources.

·
Nonprofits in some fields are more likely to succeed in social
media fundraising than others. Especially successful are those that
support health-related causes and, in particular, present an
immediate need or benefit to the public — treatment for a
sick child, a home for a wounded soldier, a campaign to save a
life.

· Social
factors may be pushing donors to give more to popular and socially
acceptable causes. This has implications for organizations whose
efforts are less well-known than others or do not focus on popular
“warm and fuzzy” social issues.

· Online
donors appear to be more willing to fund specific and new projects,
rather than pre-existing programs, especially those that offer
tangible deliverables like a clubhouse or a new film.

·
Attention-getting organizations and projects are more likely to
receive funding than those that are more passive in their approach
to donors.

· Such
practices as crowdsourcing and mobile donations, which represent a
major change in the way individuals donate to charities, offer new
ways for nonprofits to generate greater donations.

· Online
and traditional fundraising methods complement one another. Large
numbers of “fans” generated by a good website and
social media outreach can be approached using traditional methods
as well.

Saxton conducts research on the organizational implications of
new and social media, particularly with regard to nonprofit
organizations and financial markets. His studies in these areas
typically touch on organizations’ communication with their
external stakeholders, including such issues as organizational
disclosure, organizational accountability and stakeholder
relations. He is interested in understanding not only why
organizations are more or less successful in these areas, but also
the effects of different disclosure, stakeholder relations and
accountability practices on organizational success.

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